How Do Legal Differences and Learning Affect Financial Contracts?

Steven Kaplan (), Strömberg, Per and Frederic Martel
Authors registered in the RePEc Author Service: Per Stromberg

No 4161, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyse venture capital (VC) investments in 23 non-US countries and compare them to VC investments in the US. We describe how the contracts allocate cash flow, board, liquidation, and other control rights. In univariate analyses, contracts differ across legal regimes. At the same time, however, more experienced VCs implement US-style contracts regardless of legal regime. In most specifications, legal regime becomes insignificant controlling for VC sophistication. VCs who use US-style contracts fail significantly less often. Financial contracting theories in the presence of fixed costs of learning, therefore, appear to explain contracts along a wide range of legal regimes.

Keywords: Investment banking; Venture capital; Brokerage; Financing policy; Capital and owner ship structure (search for similar items in EconPapers)
JEL-codes: G24 G32 (search for similar items in EconPapers)
Date: 2003-12
New Economics Papers: this item is included in nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Related works:
Working Paper: How Do Legal Differences and Learning Affect Financial Contracts? (2004)
Working Paper: How Do Legal Differences and Learning Affect Financial Contracts? (2003)
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